Carbon Competitiveness Incentive Regulation

Benchmarks For Natural Gas Plants

December 2018

Government Of Alberta

Industry Sector Standards

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Overview

• Background and Sector overview

• Benchmarking Data Collection

• Benchmarking Results

• Economic Analysis

• Final Gas Plants Benchmarks

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Sector Overview

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• Majority of facilities are not large final emitters (LFEs).

• 33 out of about 500 natural gas processors are LFEs and subject to carbon pricing

(~25% of production).

• LFE facilities employ about 1400 people.

• Natural Gas Processing sub-sector emitted 14.7 MT CO2e in 2015

• Natural Gas LFE’s emits approx. 6 MT of CO2e per year (4.4 % of LFE emissions)

Non LFE -Natural Gas Processing

8.7

LFE Natural Gas Processing

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Natural Gas Processing Sub-Sector Emissions (in Mt CO2e)

Carbon Dioxide93%

Methane6.8%

Nitrous oxide0.2%

Natural Gas Processing Greenhouse Gas Emissions - by Gas Type

Background

• Up until the end of 2017, facilities were regulated under the Specified

Gas Emitters Regulation.

– Subject to facility-specific reduction targets.

• The CCIR came into effect on January 1, 2018.

– Due to data constraints, interim facility-specific benchmarks were

assigned until sector-based benchmarks could be developed.

• Alberta Climate Change Office (ACCO) collected data from industry

throughout 2018, and developed sector-based benchmarks using a

modular approach.

– The new benchmarks were implemented in November 2018.

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Background

• Natural gas processing facilities not covered under the CCIR are

temporarily exempt from the Carbon Levy Regulation.

– A significant number of natural gas facilities with emissions below the

CCIR threshold of 100,000 tonnes of CO2e are expected to opt in to the

CCIR when the carbon levy exemption ceases in 2023.

• There are no direct comparisons to a sector-based emissions

intensity benchmark for natural gas processing in other Canadian

jurisdictions.

– In the European Union, facilities receive a fuel/heat facility-specific

approach.

– California has a single benchmark for conventional oil and gas, and one

for natural gas liquids; however, there is no differentiation for complexity,

as there is less variance among facilities.

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Stakeholder Engagement

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• ACCO regularly consulted with the industry on both the facility level

and through the sector’s professional associations including CAPP

(Canadian Association of Petroleum Producers)

– CCIR engagement process in 2016/17.

– December 2017 - webinar introducing the CCIR to the oil and gas sector

General

– February 2018 - gas plant-specific webinar, discussing interim

benchmarks

– October 2018 – Meeting with CAPP on new benchmarks for gas plants

– Various facility based individual meetings and conference calls

throughout 2018

– November 2018 – Sector wide webinar on introduction of new

benchmarks for gas plants

Benchmarking Data Collection

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Benchmarking Modules

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• 29 LFE Gas Processing facilities voluntarily

participated in the benchmarking exercise

• 15 Different modules were identified within Gas

Processing facilities and production/emission

data was collected for each.

• 13 modules are specific to an individual process

• 2 modules (Formation CO2 and Flaring,

Venting, Fugitives, Other) are general plant

wide modules.

• Benchmarks have been calculated for 13

modules with the exception of Co/Power

Generation (already exists as 0.37 tCO2e/MWh)

and Cavern Storage (not enough facilities with

this module to establish a benchmark).

Distribution of Modules

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Facilities Production

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Note: Cubic meter of oil equivalent (m3OE) is a unit of energy based on the approximate energy released by burning one m3 of crude oil. It is

used as a way of combining production/throughput into a single measure.

Total Emissions per Facility

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Note: Total emissions above include indirect emissions.

Benchmarking ResultsSector Single Benchmark

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Facility Based Emission Intensities

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Single Benchmark Compliance Overview

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NOTE: No Transition Allocation was accounted for.

Benchmarking ResultsModular Benchmarks

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Modular Benchmarks Compliance Overview

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NOTE: No Transition Allocation was accounted for.

Modular Benchmarks Compliance Overview

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Modular Benchmarks Compliance Overview

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Modular Benchmarks Compliance Overview

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Compliance Cost Overview

NOTE: No Transition Allocation was accounted for.

Final Gas Plants Benchmarks

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Natural Gas Processing Benchmarks

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Benchmarks Type: Modular , 90% PWA, 90% Facility Historic Based formation CO2

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Alberta Gas Processing Index (ABGPI)

• ABGPI is the sum of the products of the individual module weighting factors with the

facility’s corresponding throughput or production for each module:

ABGPI = Σ(wi*pi) [ tCO2e ]

where

wi – weighting factor for module i

pi – production/throughput for module i

• Natural Gas Processing benchmark is determined as:

B = 0.9tonnes CO2e

ABGPI

• Formation CO2 emissions are allocated on a facility-specific basis separately from the

ABGPI.

• The methodology for quantification of the ABGPI will be provided in the Quantification

Methodologies for the CCIR and the Specified Gas Reporting Program.

VP

End Of The Presentations

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